Actuarial Science Quotes

De Morgan was explaining to an actuary what was the chance that a certain proportion of some group of people would at the end of a given time be alive; and quoted the actuarial formula, involving p [pi], which, in answer to a question, he explained stood for the ratio of the circumference of a circle to its diameter. His acquaintance, who had so far listened to the explanation with interest, interrupted him and exclaimed, 'My dear friend, that must be a delusion, what can a circle have to do with the number of people alive at a given time?

In our society, there seems a general rule that, the more obviously one's work benefits other people, the less one is likely to be paid for it. Again, an objective measure is hard to find, but one easy way to get a sense is to ask: what would happen were this entire class of people to simply disappear? Say what you like about nurses, garbage collectors, or mechanics, it's obvious that were they to vanish in a puff of smoke, the results would be immediate and catastrophic. A world without teachers or dock-workers would soon be in trouble, and even one without science fiction writers or ska musicians would clearly be a lesser place. It's not entirely clear how humanity would suffer were all private equity CEOs, lobbyists, PR researchers, actuaries, telemarketers, bailiffs or legal consultants to similarly vanish. (Many suspect it might markedly improve.) Yet apart from a handful of well-touted exceptions (doctors), the rule holds surprisingly well.

Bartolomé de las Casas had invented actuary science in the early 16th century by studying what happened when you forced people to move from one environment to another—they died. Which was apparently the intended result in the Yaqui’s case. Like Hitler’s victims, the Yaquis were forced into overloaded cattle cars, transported across the country (with many dying along the way) and forced to work until they died. As with the Nazi camps, the Yaquis were housed in overcrowded barracks, underfed and worked until they dropped dead. In a final comparison with the Nazis, the bodies were then cremated.

Price started by studying records kept in London, but the life expectancies in those records turned out to be well below actual mortality rates.19 He then turned to the shire of Northampton, where records were more carefully kept than in London. He published the results of his study in 1771 in a book titled Observations on Reversionary Payments, which was regarded as the bible on the subject until well into the nineteenth century. This work has earned him the title of the founding father of actuarial science—